Nine pro-Palestinian Turkish activists were killed in the Israeli assault, sparking a major crisis between the long-time regional allies and compensation claims from the victims' families.

In the diplomatic tussle since, "the gap between the expectations of the two sides is closing," Foreign Minister Ahmet Davutoglu told AFP in an interview on Wednesday.

"Progress has been made to a great extent, but the two sides need to meet again for a final agreement," he said.

Sticking points have been the amount of compensation and the legal status of the deal, but Turkish Deputy Prime Minister Bulent Arinc said earlier this week that an agreement would soon be signed.

He said that after Turkish local elections Sunday -- seen as a major electoral test for Prime Minister Recep Tayyip Erdogan -- "our first job will be making sure the compensation is bound by a legal document."

Davutoglu also said that "an answer is expected from the Israeli side" to Turkey's demands. "It is our preference, whether it will be before or after the elections ... We do whatever is right at the right time." more